There is no shortage of people willing to tell you what to do with your money, the financial advisor is one of the growth professions of the new millennium.

It’s important to be aware of the differen types of advisor:

Tied advisors work for one institution and will only advise on that institution’s products. They will not necessarily tell you about the best deals available. Tied advisors can be useful if you’re already considering investing with aparticular institution. Otherwise, if you useÂ tied advisors be sure to compare quotes from 3, 4 or however many you have time to go to.

Independent advisors advise across the whole range of products available and should find the very best for your needs. Independent advisors are paid in 2 ways:

Commission based – advisor earns commission from products they recommend
Fee based – client pays advisors fee, advisor refunds any commission to client

Commission based advisors cost nothing for their time, but they may have ulterior motives (ie higher commissions) for recommendations.

Important points

Is the advisor qualified and licensed?
Does s/he belong to the relevant professional bodies?
Is s/he bound by any code of practice?

Personal recommendation counts for a lot, otherwise ask to see testimonials from satisfied clients.

Advisors can assist in the financial planning process, but remember it’s YOUR money at stake. Ask your advisor difficult questions – and lots of them. Never abdicate your responsibility to an advisor, and never invest in anything you don’t understand.